Daily Market Trend Guide -- Wednesday, May 27, 2015

MARKET REPORT                                                                                     May 27, 2015

Though the Markets pared its losses in the final hour of the trade, it continued to end the day with a modest loss while taking support at its all important 200-DMA at Close levels.  Markets saw a flat opening and remained very briefly into the positive territory while forming its day’s high of 8378.90 in the very early minutes of the trade. However, after remaining very briefly in the positive, the Markets came off and traded in negative territory. It continued to trade with capped losses in the first half of the session but the second half saw some more weakness creeping in. The Markets went on to form the day’s low of 8320.05. However, it attempted to take support again at its 200-DMA and it saw some paring of losses from those levels. The Markets finally settled the day at 8339.35, posting a modest loss of 30.90 points or 0.37% while continuing to form a lower top and lower bottom on the Daily Bar Charts.

MARKET TREND FOR WEDNESDAY, MAY 27, 2015

Today, we enter into penultimate day of expiry of current series. Along with this, this also remains a crucially important day for the Markets that can impact its trend in the immediate short term. We are likely to see negative opening today and there are chances that the Markets sees itself opening below its 200-DMA. If this happens, it would be very critically important for the Markets to move past this level again. Until this happens, we would continue to see some bearish undertone in the Markets.

For today, the levels of 8380 and 8450 would act as immediate resistance levels. The supports are expected at 8310 and 8230 levels.

The RSI—Relative Strength Index on the Daily Chart is 48.5271 and it remains neutral as it shows no bullish or bearish divergence or any failure swings. The Daily MACD still continues to remain bullish as it trades above its signal line.

On the derivative front, the NIFTY May futures have shed over 11.64 lakh shares or 9.77% in Open Interest whereas June series have added over 20.99 lakhs shares or 47.02% in Open Interest. Overall, on net basis, NIFTY has added over 9.50 lakhs shares in Open Interest. This signifies rollovers of short positions in the Markets. NIFTY PCR stands at 0.99 as against 1.03.

Coming back to pattern analysis, the Markets gave a technical pullback after posting its recent lows on May 7^th. During this pullback, the Markets managed to move past its 200-DMA which it broke on the downside earlier. However, the Markets are not able to confirm this reversal as at least as of today, it has failed to post any higher bottom after recent lows. Today as well, the opening might see the Markets below 200-DMA and therefore, it would be of paramount importance for the Markets to move past this 200-DMA levels again. Until this happens we would continue to witness bearish undertone in the Markets.

All and all, non-technical factors such as currency weakness, weak earnings from key stocks, etc., will continue to weigh on the Markets as well. However, the Markets still are under the process of confirming its reversal and as of now, the bottom of May 7^th holds valid and crucially important. Absence of delivery based buying in the Index components is also weighing in the Markets. Given this scenario, we would reiterate to remain extremely light on the exposure and maintain adequate liquidity until the directional bias is established.

Milan Vaishnav,

Consulting Technical Analyst,
Af. Member: Market Technicians Association (MTA), USA
Af. Member: Association of Technical Market Analysts, INDIA

www.MyMoneyPlant.co.in

http://milan-vaishnav.blogspot.com

+91-98250-16331

milanvaishnav@mymoneyplant.co.in

milanvaishnav@yahoo.com